When asked how he won his battles, General Nathan Bedford Forrest said, “I always make it a rule to get there first with the most men.” Whether he really said it that way, or whether he said “git thar fustest with the mostest,” as he is more commonly quoted, is not important. In good English or colloquial, Forrest’s rule of thumb embodies a fundamental principle of war. It is just as valid today as it was in 1865—or, for that matter, in 1865 B.C.
There are some who say the next war will be just a missile duel at long range—merely a matter of lobbing some appallingly destructive warheads neatly over the nervous folk of Europe between the U.S.A. and the U.S.S.R. This is foolish counsel indeed. As Korea, Suez, Lebanon, and Quemoy confirm, wars may be small or localized, or limited in objective, as well as global and utterly destructive. And in any event they require the deployment of military forces in remote theaters of conflict. Neither the A-bomb nor the ballistic missile has repealed the tactical principle so succinctly phrased by General Forrest.
If war were to come unheralded, some grim Monday morning, the United States would need to move enormous numbers of personnel and tonnage of weapons, equipment, ammunition, and supplies to distant bases or allies. In tonnage terms, this is a task for transports and cargo ships, not aircraft. Sealift in peacetime moves 99.5% of the nation’s military and commercial tonnage overseas, airlift 0.5%. In wartime, sealift has an even larger role. Yet the 0.5% is important. If in General Forrest’s phrase you want to get there “fustest,” you will use transport aircraft. But if you want to be there with the “mostest,” you’ll rely on surface shipping.
The pace and tempo of modern war place new emphasis on the airlift of specialized personnel and high-priority cargo of little bulk. And for this essential job we need a large reserve of airlift capacity. But in exploring this defense need, we ought not to lose sight of the fact that it is only one very small fraction of the logistical problem. One Victory ship, sailing normally between New York and Bremerhaven, chalks up about 672 million cargo ton-miles a year. Yet our total military airlift for a recent year was only 669 million ton-miles. By the ton-mile yardstick, one plodding merchantman does the work of our entire military airlift. Both forms of transport have vital roles to play, complementing each other.
In peace and war alike, the Navy relies heavily on privately owned and operated ships of merchant fleet to supplement its own sealift. And in similar fashion, the airlift capacity of the Military Air Transport Service (MATS) is backed up by the four-engine transport aircraft of the nation’s privately owned and operated airlines. Within two days after a war or like emergency arose, MATS would have at its disposal the airlift capacity of 295 modern long-range transports, turned over by the U. S.-flag commercial airlines, domestic and overseas.
Flight crews and maintenance forces would be fully trained; ground personnel for operations would be on the job in this and other countries. And a great variety of valuable installations from workshops and parts depots to weather stations and baggage-handling facilities, would be available in this country and ninety other countries or colonies overseas. This reserve force of long-range aircraft could handle 8½ million ton-miles of personnel or cargo daily. If the U. S. government were to keep such a reserve fleet in readiness, it would cost the taxpayers close to $400 million a year.
This briefly is why a strong civil air transport arm is essential to the security of the United States. Any major world power needs such an airlift reserve, just as it needs a modern merchant marine. In the case of the United States, the need for both—surface and air fleets in reserve—is greater and more urgent, because America depends so heavily on overseas bases and allies, and on deploying its own forces in overseas theaters.
The merchant marine is a far from perfect analogy. But our national experience with it is worth recalling, as a guide to the evaluation of policy for our merchant fleet of the air. We have found a workable and sound formula for the maintenance of an adequate merchant marine. We have still to develop an equivalent formula or policy for our civil air transport fleet, especially in overseas service. Our past experience with the merchant marine cannot fail to give us some clues as to what we should do—and what we should not do.
In 1957 the U. S. merchant marine was the largest of the world in tonnage, and second only to that of Britain in number of vessels. It embraced 3,100 vessels for a total of 33 million tons. But only one-third of those ships were in active service. The others were in a national reserve, available for an emergency. Every nine minutes, a vessel loaded with foreign trade cargo enters or clears some U. S. port. But only one in four of them flies the American flag. This percentage, however, has varied enormously from time to time. From the founding of the country until the middle of the nineteenth century, American-flag ships carried nearly all our overseas cargo, outbound and inbound. The merchant flag was a familiar sight in every seaport of the world.
But from around 1850 until World War I, the U. S. merchant marine was in the doldrums. It was unable to compete with foreign merchant fleets in the age of steam—ironical as this might seem for the nation that was to lead the world in industrial technology later on. No serious effort was made at Washington to change this. The young United States was preoccupied at home and saw no threat of foreign war. It simply was not interested in its own merchant marine.
How the U. S. Built Its Merchant Fleet
Following its feast-or-famine policy, the American government met the crisis of
World War I by building a vast new merchant fleet. And soon half our goods again was moving in American bottoms. But that fleet of merchantmen was allowed to diminish. The needs of World War II were better met, because in 1936 the Merchant Marine Act laid the basis for a consistent, steadily modernized merchant fleet. In the national interest, that act sought to conserve three things: a fleet of passenger and cargo ships in being, active and reserve; a shipbuilding industry, with its yards and lofts and other facilities; and the manpower and skills to build and man merchant vessels. The act also encompassed research and development, so as to get improved ships and equipment—a policy responsible for the current construction of a nuclear-powered merchantman.
After World War II and its great shipbuilding spurt, a new pattern emerged. Between 1946 and 1957, the percentage of our overseas trade in American bottoms declined from 65 to 16.5—a familiar curve for a postwar period. But a strong, continuously modernized merchant fleet remained in existence. And it so remains, no matter what percentage of our freight moves in vessels of U. S. registry.
This of course is done by a system of subsidies. To keep this reserve of merchantmen both large and modern, the government provides for orderly replacement. Some 300 new passenger and cargo ships are to be built over a 20-year period at a cost of $3 billion. Contracts for $2 billion had been signed by the middle of 1958. Five new fast passenger liners joined the U. S. merchant fleet in that year.
The basic 1936 act provides for a half-dozen types of subsidy, chief of which are construction and operating subsidies. The one pays up to half the initial cost of a ship, to make up for the higher building cost in U. S. yards. The other pays a sizeable share of operating costs for specified sailings on agreed schedules, to make up for the higher wages and other operating costs of U. S.-flag lines. With other subsidies, these have required an average annual outlay of about $125 million a year to maintain a merchant fleet.*
This is money wisely spent, in the interest of the nation’s security, not to mention the great benefits to the country’s commerce and industry as well. A merchant marine is an industry that cannot be protected by a tariff. Only a subsidy can make up for the lower wage levels, lower ship construction costs, lower taxes, and other advantages of foreign merchant fleets (not to mention the subventions often given to foreign-flag merchant lines by their home governments).
When we turn to international air transport, however, we have quite another situation. Fortunately, the rules of the game are different for the merchant trade by air; and it should be easier to keep the United States out in front in civil aviation. But this can be done only if there is a firm determination to do so, and if salutary national policies are formulated and pursued. In great part, it is a responsibility of government, which has the power to regulate.
The rules of the game are important. Long ago it was universally accepted that the seas were free to anyone, that any merchant ship of any flag might enter the ports of any country, in normal conditions. When air transport commenced, however, a wholly different legal concept emerged. Each nation, it was agreed, enjoyed full sovereignty over the air space above its territory. It could bar foreign aircraft from that air space, or it could allow them to use it—on its own conditions.
In this way, the United States, like other nations, has the means of determining what foreign-flag aircraft may come into American territory, may overfly it, may land there, may take on or leave passengers or cargo. We can write our own ticket, as to international civil aviation—subject, of course, to the practical necessity of making concessions to foreign countries in order to get for our own airlines the privilege of doing business in those countries. In a word, we have better tools than mere subsidies to help insure the development and continuance of U. S.-flag international airlines. If our policies are wise and consistent, we should be able to maintain a strong overseas air fleet with little or no subsidy in normal times.
The U. S. Civil Air Fleet
Let us now take a closer look at America’s civil air transport fleet. At the end of 1957, there were 60,000 private and company planes in the United States, about 40,000 military aircraft, and approximately 1,800 civil transport planes. In numbers, the commercial fleet may seem small. But in terms of the people and cargo it can move, and also in terms of the logistics of war, this armada of transport aircraft is immensely important. Half of those planes are four-engine, for long range service. With their 1,800 planes, their 125,000 employees, their physical facilities here and abroad, and their managerial and operating know-how, the airlines of the United States represent the most efficient, the largest, and the most competitive air transport system in the world.
The domestic air fleet is relatively secure, even though individual companies have their ups and downs in the competitive struggle, and even though the average earnings of all of them may be down materially from the level of a few years ago. They are largely protected from foreign competition in respect to purely internal traffic—although even this trade may be encroached on as foreign-flag carriers scramble for rights to fly into many interior U. S. cities instead of stopping at the natural maritime gateways. But the international carriers are in an altogether different position. They are in direct, continuous and intensive competition with foreign-flag carriers on virtually all routes. As of 1958, there were thirteen U. S.-flag lines in international service, although only one large and three small ones were exclusively so. The largest, other than all-cargo, in terms of revenue ton-miles (in thousands, for 1958) were as follows:
Airline | Total | Domestic Trunk | Inter national |
American | 603,294 | 588,565 | 14,729 |
United | 581,743 | 553,426 | 28,317 |
Pan American | 517,606 | — | 517,606 |
Trans World | 509,224 | 405,217 | 104,007 |
Eastern | 494,664 | 442,309 | 52,355 |
Northwest | 163,832 | 112,928 | 50,904 |
Capital | 163,686 | 163,686 | — |
Delta | 156,330 | 146,960 | 9,370 |
Braniff | 108,112 | 96,497 | 11,615 |
National | 100,887 | 94,355 | 6,532 |
Western | 55,540 | 53,068 | 2,472 |
Continental | 41,098 | 41,098 | — |
Northeast | 37,623 | 37,623 | — |
Panagra | 24,216 | — | 24,216 |
Pacific Northern | 15,499 | — | 15,499 |
Caribbean | 1,805 | — | 1,805 |
Why does the United States need an international air transport industry? There are many reasons—commercial, political, and military. Like the merchant marine, a civil air fleet under our own flag is a major advantage in foreign trade, especially in having regular flights to various overseas markets, and at least a minimum of scheduled flights to some distant areas where trade is not so easily come by. Swift transport of passengers, mail, and cargo is especially useful for the American business system, which has developed in an aggressive, highly competitive pattern. To deal with an emergency problem in a European branch plant, an American corporation can put a trouble-shooter or technician into England by air in twelve hours, instead of six days’ sailing by surface ship. And with jet transport operating since 1958, it now takes only 6½ hours. But only with U. S.-flag airlines, keyed to America’s needs and subject to America’s control, can we be sure of the facilities that U. S. business needs.
From the political standpoint, the United States clearly needs its own international air service. Not only for prestige, which is not unimportant in today’s world, but for trustworthy communications, the leading nation of the free world could not afford to depend on foreign-flag carriers. The United States has hard and fast commitments of a military nature to about forty countries throughout the world, and has its own military bases at many points. It plays a a major role in the international politics of almost every significant area abroad. With such involvements, it must have at hand a regular, dependable network of civil airlines, not subject to the political influence or the vagaries of foreign governments.
National Security: The Basic Argument
The most compelling reasons, however, concern the nation’s security. The basic case for our international air fleet is strategic. To begin with, the United States needs a strong, healthy airframe and engine industry, with all the technical and production resources that represents—just as it needs a sturdy shipbuilding industry. This it has today, and in quite spectacular measure. American-built transport aircraft are standard equipment on nearly all the airlines of the world. But if our aviation manufacturing industry had to depend on orders from foreign-flag airlines for its production of long-range transport planes, it would face a bleak and uncertain future. Britain, Sweden, France, Canada, Australia, and the Soviet Union all manufacture aircraft. Other countries can and will. For real strength, our airframe and engine industry needs the sure backlog of continuing demand from U. S.-flag transport lines, overseas as well as domestic. Early in 1958, the U. S. scheduled air lines had nearly 500 aircraft on order with American builders, an important share of which are earmarked for overseas service. Without this substantial commercial business year after year, U. S. aviation manufacturers would not be in position to meet a sudden, acutely urgent demand from the armed forces in a grave emergency.
With no less urgency, the United States needs a ready reserve of overseas airlift, beyond what is practical for the armed forces themselves to maintain in readiness. More than in past conflicts, any future emergency will require the transport of personnel and great tonnages of high-priority cargo to distant bases and theaters of action. Getting there “fustest with the mostest” in our time means flying high-priority men and equipment at 350, or even 550 miles an hour, as well as moving far larger tonnage by sea at twelve knots.
The U. S.-flag international carriers maintain a complete working organization. They not only have long-range planes for intercontinental service, but also skilled flight personnel who know the routes, weather, and local flight regulations around the world. They have adequate maintenance and overhaul crews at home and abroad, a large corps of operations people, and a great investment in physical facilities—mostly in the United States but spread also through scores of countries overseas. It is not just a certain number of aircraft that are available, but a complete operating organization in total readiness and at a high state of efficiency.
The value of the U. S. commercial airlines to the national military effort was abundantly shown in World War II, in the Berlin blockade airlift in 1948-49, and in the Korean war. During three years of hostilities in Korea, for example, private air carriers moved 100,000 personnel and 23 million pounds of cargo over the 7,000-mile trans-Pacific route in logistical support of U. S. and UN forces in the combat zone. In that period, U. S. commercial airlines flew almost twice as many outbound trips as MATS, RCAF, Sabena, and Canadian Pacific Airlines—all of which shared in this logistical task—and carried 61 per cent of the total air tonnage transported to the Korean theater.
The Suez crisis of 1956 and the sudden move into Lebanon in 1958 demonstrated the kind of emergency that demands the speed of airlift—although the Lebanon operation was on so large a scale that sealift was needed for the bulk of troop and supply movements. It can happen, in quite small brush fires or at the first stage of greater involvements, that the critical factor is not how many troops can be put into a trouble zone, but how swiftly they can be brought in. “Fustest” sometimes may count for more than “mostest.”
As with the merchant marine, certain components of our civil air fleet are specifically committed to the military. Through the Civil Reserve Air Fleet (CRAF), there are now 295 four-engine aircraft (passenger and cargo) earmarked for rapid cutover to military use—on 48 hours’ notice. Many of these planes carry at all times special gear needed only in military use—just as certain merchant ships have specially strengthened decks and other equipment to give them maximum usefulness for military duty. (All other transport aircraft of U. S. airlines are subject to mobilization, too, through a system of passenger and freight priorities.)
In broad terms, CRAF is prepared to supply about forty per cent of assumed wartime airlift requirements, or 2.8 billion ton-miles a year. If the U. S. government were to assume this responsibility, and to duplicate the facilities kept in readiness by private airlines in CRAF, it would have to spend $550 million to acquire the equivalent piston aircraft, and then spend $350 to $400 million a year to maintain them, with personnel, in sufficient readiness. The government already is spending $225 million annually to operate just the scheduled overseas flights of MATS (Military Air Transport Service), and probably twice that, when all MATS airlift operations are counted in.
In other words, to assure the same potential of wartime airlift, the armed forces without CRAF would have to enlarge their expenditure for overseas airlift by 150 to 175 per cent, and also make a mammoth capital outlay. Actually, the $550 million for piston aircraft is an understatement, because long-range jet planes are now coming into service. MATS has deliberately stayed out of the turbo-jet field, figuring that the commercial airlines can buy the costly jetliners. The saving to the government here in capital outlay is of the order of $3 billion, rather than half a billion. As the equipment, facilities, and organization of our commercial transport system grow year by year, their value to the national defense grows also. And so does the economy they represent for the American taxpayer. For after all, we have got to maintain this airlift potential, one way or another.
In numbers of airplanes, a large part of this CRAF potential comes from domestic airlines. But the overseas carriers have a crucial importance. They have a high proportion of long-range, high-capacity aircraft, of the types most urgently needed in military operations. It is the overseas carriers that have the flight personnel familiar with overseas flying. They have the actual installations abroad, without which efficient world-wide airlift operations would be impossible.
In coming years the overseas lines will have a still greater importance, because they will have the long-range jet aircraft the Government urgently wants for fast, transoceanic logistical operations. Domestic airlines meantime will be shifting to jets, to be sure, but to short-legged planes.
This can be seen in the projection of the composition of CRAF in coming years. In the Atlantic area in 1959, Pan American and TWA together are providing just about as many aircraft for CRAF as American Airlines. But by 1961, as the structure of CRAF is planned and scheduled, Pan American and TWA will be supplying 65% of CRAF requirements, and American Airlines only 9%. Contributions of other lines will be quite small. In the Pacific, Pan American currently (1959) has fewer planes committed to CRAF than Northwest or United. But by 1961 Pan Am, with a high proportion of long-range jets, is scheduled to provide 46.28% of CRAF planes, Northwest 4.23%, Flying Tigers 13%, and twelve other lines together 36.53%.
What these figures show is that the Government in the next two years is going to come to rely much more heavily on overseas airlines instead of domestic, and on Pan Am and TWA particularly—simply because they will have the jet aircraft of adequate range for worldwide logistical operations. Meantime, the number of planes committed to CRAF will drop year by year, because the planes will be larger and faster. The ton-mile capacity of the CRAF fleet however, will have grown.
Thus our international airlines make a major contribution. Pan American World Airways alone, to take one example, maintains scheduled flights on 65,000 miles of overseas routes and operates 93 overseas stations or facilities. Pan American makes money and pays taxes (and currently receives no subsidy), while maintaining regular services on routes that total considerably more than half the mileage flown by MATS. In an emergency, Pan American’s fleet could move 7,600 troops or 1,750,000 pounds of cargo a day. To take another example, looking into the jet age, TWA has on order 63 long-range turbo-jet airliners, divided about half and half between Boeing and Convair, at a cost in excess of $300 million. This company alone is adding enormously to the airlift potential of the U. S. civil air fleet.
How the U. S. Civil Air Fleet Operates
Certain facts about America’s civil air fleet must be emphasized, if its underlying problems are to be appreciated. In the first place, it is entirely maintained by private enterprise—with some few subsidies of minor importance, mainly to small domestic feeder lines. All of the dozen airlines that carry on our international operations are privately owned, privately financed, privately managed. There is no government capital invested in them whatever.
In the second place, they are in competition with foreign-flag lines and also other U. S.-flag carriers. The decision was made after World War II against the universal foreign practice of assigning overseas routes to a single carrier in the interest of efficiency and profitability. Competition is the normal pattern of the American business system, and it was the judgment of Congress that competition should prevail—within a pattern of regulation, to be sure—in international as well as domestic air transport.
Third, most of America’s international airlines are widely owned by the public. Pan American, for example, the largest of them, has approximately 45,000 stockholders. These companies are in business to make money for their owners—their shareholders—just as manufacturing and merchandising concerns are. They are not agents of American foreign policy or defense policy—although as responsible American enterprises operating overseas they do in fact serve the national interest in many ways.
Fourth, although they are subjected to competition from one another and from foreign-flag lines, our international airlines are nevertheless regulated, as public utilities are. They fly only routes allocated by the Civil Aeronautics Board and the President. They make flights as regulations may deter mine. They are subject to U. S. regulation on fares, cargo rates, and safety standards, although they may be in competition with foreign carriers not fully subject to like regulations.
Finally, as a result of these conditions, the U. S.-flag overseas carrier depends for survival on its ability, in competition and under regulation, to show earnings sufficient to tempt private investors to supply any new capital required. And that is not inconsiderable, in an industry that is growing rapidly and is pacing the headlong technological change of the time. Such an airline—assuming good management—can make money only if competition is not excessive and regulation is not too harsh, demanding or discriminatory. Unless it does make money, it cannot hope to finance itself and stay in this intensely competitive field.
In years past, there was a program of subsidy to our international air carriers, as to our domestic lines also, in recognition of the need for support if costly and unrewarding routes were to be established and maintained. But as air transport has become the chief means of moving people, and has become a mass instead of a class business, U. S. policy has been to eliminate subsidies. Mail pay formerly was figured generously, as a thinly veiled subsidy. Now, however, it has become simply payment for a commercial service rendered. As for direct subsidy, this has been fast disappearing. Trans World Airlines, with many high-density domestic routes to help compensate for the hazards of overseas service, went off subsidy entirely in 1952. Pan American, with no domestic routes at all and some long, thin, national-interest routes, was still on subsidy until 1957, when such aid ended.
In many instances, of course, the government recovers one half of such subsidies directly in income tax. In the long run—for the next twenty years, let us say—subsidies may be required, just as in the merchant marine, if the United States is to keep a strong international air transport system against the competition of lower-cost, subsidized foreign air carriers. But if by other means than subsidy these airlines are enabled to get a fair share of the international air traffic, direct subsidy should not be needed on any large scale.
Basically, then, America’s civil air fleet in international service is an outward extension of the American free enterprise system. Its routes are the long fingers of a competitive, characteristically American industry; but they reach into a realm otherwise chiefly occupied by a totally different kind of business enterprise. This leads us to a consideration of the foreign-flag carriers—the overseas competition.
Foreign-flag Carriers: How They Operate
There are exceptions, but mainly the big foreign-flag airlines were created for different purposes, have been built by different methods, and operate on different principles. They are the products of a different philosophy. Typically, a foreign-flag line is the only line of its country. It has a monopoly privilege, so far as overseas operations under that flag are concerned. It is a “chosen instrument.” This pattern was not mere chance. European countries, out of long experience with merchant marines, learned the value of a single, government-backed enterprise for overseas service. They have applied that lesson to air transport.
Furthermore, some foreign-flag carriers have a full monopoly of purely domestic traffic in their own countries, which gives them a solid base of wholly protected traffic of higher density at home. Thus they can meet severe competition or even take heavy losses in their international operations, offsetting them against domestic profits. In addition, the airlines of some colonial powers have complete monopoly rights to the trade between mother country and overseas possessions—an advantage no single U. S.-flag fine enjoys.
Many foreign-flag lines have had direct government grants, either to meet operating deficits or to provide new investment capital. British Overseas Airways has received such grants from the British government. So has KLM from the Dutch government, including $30 million of outright capital investment plus loans later. A similar pattern can be found in the financing of Sabena, Trans-Canada, Aerolineas Argentinas, Swissair, SAS, Lufthansa, Air France, and others—although the method may vary and the subsidy may not always be obvious. Transactions tagged “loans” may in fact be non-repayable loans.
The very purpose of the typical foreign-flag international airlines is distinctly different from that of America’s overseas carriers. It may be chiefly to tie the colonies to the homeland—a major aim of Sabena, we may be sure. It may be to keep a fleet of transports in readiness for military use. It may be to gain prestige for the country concerned—especially in the case of some small nations, notably in Latin America. It may be to further export trade. On the other hand, it may be for the political penetration of areas marked for later absorption, as one may fairly suspect to be the aim of Russia’s Aeroflot in Southeast Asia. Or again, it may be as innocent as the promotion of the tourist trade of the country, as is obviously the goal of Swissair, KLM, Air France, and others.
Whatever the primary purpose, it is not to make money. Or at least the profit motive is not over-riding, if it exists at all. The foreign-flag airline is usually an arm of its government, an extension of that government’s power and influence, a tool for the prosecution of national policy. Now there is nothing evil about these purposes—excepting those related to actual or intended aggression. The point is simply that they create formidable competition for U. S. carriers, which are not the chosen instruments of their home government and which have to pay their own way in a fiercely competitive struggle. It is something like the unequal competition between a privately-owned electric power company and a publicly-owned power plant that does not pay taxes and does not have to show a profit.
Aeroflot: The Extreme Case
All this is seen most vividly in the recent expansion of Aeroflot, the civil airline of the Soviet Union. Aeroflot is by no means typical of foreign airlines. But it is instructive to look closely at its operations, because they pose the extreme case of what is unfair competition by the American ground rules. Formerly serving only Soviet territory and some satellite countries, Aeroflot did quite a good job of providing an unvarnished, rough and ready air transport for a vast territory which never had proper railways and highways. Like some domestic airlines in the mountain-and-jungle countries of Latin America, Aeroflot was valuable as a pioneer force in developing a country long handicapped by poor communications.
Then, rather abruptly, Aeroflot was expanded, commencing around 1955. Already it has spread out until by mid-1958 it was flying 58,000 route miles and reaching into sixteen countries. It has now, or has started negotiations for, routes to Scandinavia, England, France, several Middle East countries, and numerous points in South and Southeast Asia. Most of Aeroflot’s new routes, it is clear, tap areas which are the targets of other expansionist efforts of the Kremlin. Manifestly, the planning of new routes is geared to political foreign policy.
Furthermore, this is no longer the primitive service that linked the component parts of the Soviet Union a few years ago. After a period of using clumsy, inefficient aircraft, mere adaptations of bomber planes, Russia developed several new turbo-prop and turbojet passenger types. In fact Russia was two years ahead of the United States in providing regular, scheduled, long-distance jet passenger service, such as the Moscow-Prague service, 1,000 miles in two hours. We may note in passing that Russia is the only country other than the United States that relies solely on aircraft of its own manufacture for long-distance transport. (Even the U.S.A., for all its great aviation manufacturing industry, has been using many British-built Vickers Viscounts in medium-range domestic service.)
In other words, what the Russians have done in civil air transport, they have done solely by their own efforts, and very rapidly. How can they? The answer is mainly found in the fact that Aeroflot doesn’t have to make a profit. It doesn’t have to break even. It doesn’t have to sell securities to the public to finance itself. It is an arm of the Soviet government, just as much as the Soviet Navy.
As nearly as can be judged, the functions of Aeroflot are these:
To provide a reserve of logistical air power for military needs.
To help implement the economic penetration of selected foreign countries, and to pave the way for political penetration.
To serve a propaganda purpose by gaining prestige for the USSR, especially in underdeveloped countries, and to demonstrate and prove to the world the advances made by Soviet technology.
To promote foreign sales of Russian-built aircraft.
Speaking of Russia’s cold war methods, especially the economic phase, Allen W. Dulles head of the Central Intelligence Agency, remarked that “They will buy anything, sell anything, dump anything, if it will advance world communism.” He might have added: “or fly anything,” because Aeroflot’s operations are on that same basis.
As we have noted, Aeroflot is the extreme case, and the sound, well-managed national airlines of Britain, Belgium, Switzerland, West Germany, Scandinavia, and some other countries are not to be put in a bracket with their Soviet counterpart. But they do offer unequal competition, in less extreme fashion. For example, there is the handicap of the U. S.-flag airlines in respect to wages and salaries. This closely parallels the handicap suffered by the U. S. merchant marine.
In the North Atlantic service, for instance, Pan American in 1958 was paying its senior pilots $22,000 a year. Other U. S. international carriers had about the same scale. On similar routes and at the equivalent seniority level, BOAC paid $8,800 to $9,000; and Swissair, KLM, and some others were close to this level. Lufthansa paid about $7,000. And there are the lower-paying lines, well below that. The same ratio, American to foreign, holds for other flight personnel, ground crews, and administrative personnel. As a rule of thumb, we can say that TWA, Northwest Orient, and Pan American pay twice the salaries of the better foreign-flag lines, and three times those of the low-pay lines.
To some degree, America’s overseas carriers can make up for this handicap by fuller utilization of aircraft, and by higher productivity per worker. But there remains a differential. It tends to be a large differential because wages are a very large part of the total operating cost in air transport.
Everybody Wants an Airline
One of the truly formidable problems for our U. S. flag air carriers is the almost unbelievable proliferation of international airlines in the last decade. Since World War II, it has become the fashion for almost every country to set up its own airline. First, it flies a few domestic routes, then a few more. Then it reaches out and sets up routes to a few close neighbors. But before long the quest for prestige or some other incentive leads it to extend its routes to the wide world—to New York, if possible, or at least to Miami, which is the chief generating point for traffic into Latin America. The result is a dizzy, explosive increase in the number of airlines flying international routes. Even countries that are too small to need a domestic airline seem to feel happier if they have one or two flights a week to Miami or Houston or New Orleans under their own flag.
Ten years ago, there were 22 foreign airlines entering the United States from all points. Today the total is over forty. On the important North Atlantic route, the number is not excessive. This traffic is shared by thirteen carriers, two of them U. S.-flag. But in the main these are the strongest airlines in the world, and the competition is intense. The real nightmare of numbers, however, is in Latin America, or better phrased, the western hemisphere. In 1945, there were just nine international airlines operating in the Caribbean, Mexico, and Central and South America. Today there are more than sixty scrambling for the traffic in this same area. The traffic is large and has been growing rapidly, but it has to be split too many ways for all these airlines to prosper. This is the happy hunting ground that has attracted most of the European airlines, those of Canada, and an unbelievable number of small Latin-American carriers—not to mention nine U. S.-flag lines.
To make matters worse, there are now fifteen airlines operating on international routes in Latin America that have stayed outside the International Air Transport Association (IATA), and offer cut rates far below those established by the “regular” carriers belonging to IATA. The crazy quilt of airlines blanketing the western hemisphere seems certain to become even crazier before the situation settles down, for Japan Air Lines has plans to move into this area.
There is also another type of competition faced by the U.S.-flag airlines, of a totally different character. That is the Military Air Transport Service, the U. S. government’s own airline. With 1,400 airplanes and a yearly operating budget of $700 million, MATS is literally the biggest airline in the world. (Most of that budget and most of those airplanes, however, are for operations other than regularly scheduled passenger, mail, and cargo flights.)
Obviously, the armed forces of the United States must have their own transport aircraft, both for specialized logistical tasks and for instant readiness to move high-priority personnel and cargo. It can be argued, however, that a larger percentage of the armed forces’ and the government’s freight and passenger traffic might well be assigned to private carriers. And various committees of Congress have so contended on many occasions—possibly remembering the changing fortunes of the American merchant marine and the subsidies Congress now has to provide to keep that merchant marine afloat.
In its regularly scheduled overseas transport operations, nearly all of them operations that commercial carriers could perform and at no greater cost to the taxpayer, MATS employs 600 aircraft and 29,000 personnel at an annual cost of $225 million, flying 110,000 miles of routes with stops in 25 countries. Between 1951 and 1957, civil carriers increased by 47 per cent their passenger traffic for MATS, but in that time, MATS’ own passenger traffic increased by 172 per cent. In cargo and mail during the same six-year period, the civil carriers’ volume for MATS decreased by ten per cent while MATS’ own traffic rose by 165 per cent. Thus the trend has been away from using the facilities of commercial air carriers.
It may be that a sounder pattern is indicated by the Military Sea Transportation Service (MSTS), the equivalent agency of the armed forces for surface sea transport. MSTS puts about seventy per cent of its dry cargo into commercial bottoms; but MATS assigns only twelve per cent of its equivalent cargo via commercial aircraft. There should be room for an equitable compromise here, representing a sound balance between private and public air transport—one that will enable the commercial carriers to buttress their position and maintain their valuable reserve airlift against a time of emergency. If this is a sound policy for surface sea transport, it should be equally so for air transport.
Regulation of International Air Transport
There is of course no world-wide counterpart of the U. S. Civil Aeronautics Board to administer international civil aviation, and no hard and fast means of making and enforcing rules. But there are two organizations, the International Civil Aviation Organization (ICAO), a UN agency to deal with technical problems; and the International Air Transport Association (IATA), made up of all the major and most of the minor international air carriers. This latter, IATA, handles some common problems and also negotiates and recommends to governments. But most of the important regulation of international commercial flying is done through bilateral, intergovernmental agreements, of which the United States has made 48. Thus the U. S. government itself determines what airlines enter and leave American territory, what cities they serve, what routes they fly.
The basic principle behind this fabric of agreements is that traffic between two countries, A and B, is primary traffic for the airlines of countries A and B, and belongs mainly to them. For the airlines of third countries—C, D, and E—the A-B traffic is secondary, and they are entitled to such traffic only to fill up their planes. They are not, by this principle, entitled to put on extra flights to handle secondary traffic, but only to take fill-up traffic on planes already making those runs.
For example, TWA flies between New York and Madrid, and also between New York and Rome via Madrid. It can put on as many flights as needed for the traffic it can get, between New York and Madrid, or between New York and Rome. That is primary traffic, because it is between the United States and other countries. By the same logic, Iberia can schedule flights for all the traffic it can get, Madrid-New York. And Alitalia can do the same for Rome-New York traffic. But if there is high density traffic between Madrid and Rome, TWA is not entitled to put on extra flights for that leg of its New York-Rome route, because Madrid-Rome is not primary traffic for a U. S.-flag airline. That is primary for Iberia and Alitalia. The principle is a clear one, but not always easy to nail down in practice. A good many sins are committed in the name of “fill-up traffic.”
A second general concept underlying international air transport—not so clearly spelled out—is that each country’s airline or airlines should have traffic in some rough proportion to what its home country generates. In other words, a bilateral agreement between two governments should aim at an equitable—not necessarily equal—division of the air traffic between the two countries. If the United States generates ten times as much U. S.-German air traffic as does Germany, then the U. S.-flag airlines should get something like ten times as much of the traffic between the two countries as does Lufthansa. This, if the bilateral agreement governing this segment of international traffic is made skillfully and equitably. Obviously, this is only a rule of thumb, a goal to shoot for, a general concept to be taken into account in bilateral negotiations. It cannot and should not be enforced rigidly.
In the main, the American government has sought earnestly and with fair success to apply these concepts. In very recent years, however, some bilateral agreements seem to ignore them. One with the Netherlands in 1957 gave KLM the right to fly not only into the United States at New York but to continue on to Houston and also to Latin America—the Dutch having a small colony, Curaçao, in the West Indies. KLM soon was operating into 36 cities of the western hemisphere—almost as many as the 45 cities it serves in Europe. KLM could not conceivably support all that western hemisphere network on “fill-up traffic,” which is all it is entitled to, under the basic rules. It was in fact moving in on a volume of traffic that was primary for, and by the rules belonged to, the airlines of Latin-American and U. S.-flag airlines. This concession was given to Holland at a time when KLM already had been getting fourteen times more traffic in the American market than Pan Am and TWA were getting in the Dutch market. Such a bilateral agreement does not conform to the principle of equity.
It may have seemed equitable, in 1955, when Lufthansa, the new West German airline, was given the right to fly into five major American cities, in exchange for U. S. carriers’ right to fly into five major German cities. But in fact the United States generates far more traffic than does Germany, so it was a lopsided bargain. Lufthansa also was given routes from New York and some other American cities into South America—to cut into the already demoralized and overcrowded western hemisphere trade. Much the same might be said of the agreement made with Australia in 1957, giving Qantas the unprecedented privilege of flying passengers from Australia across the Pacific to San Francisco, on to New York, on to London and on beyond. No U. S.-flag carrier ever has been given any such privilege by the U. S. government. True, American carriers were given in return the right to fly from Australia west across the Indian Ocean to East Africa, and south across Antarctica. But that is hardly equivalent, in commercial passenger traffic!
It must be recognized, of course, that diplomacy may require some concessions beyond simple equity. For example, the restoration of Germany and Japan to economic strength, as future allies against the Soviet Union, has been a valid and important goal of U. S. diplomacy. And one way to help bring this about has been to encourage their re-entry into the field of international air transport. But there is such a thing as penalizing our own airlines unduly and the traffic statistics of the postwar period strongly suggest that our bilateral agreements have in fact penalized them.
U. S. Carriers Are Losing Ground
For a short time after World War II, the U. S.-flag airlines had a large share of total international traffic—about 73 per cent on the North Atlantic route. Many foreign airlines had been suspended during the war. Their national economies were prostrated. These countries recovered, their airlines were re-established, and some new ones were formed. All this was bound to happen. America’s lines, therefore, were bound to lose some percentage share to the new competition. Actually, they gained in total passengers carried, because the total traffic increased enormously. But their percentage share of that highly-valued North Atlantic traffic dropped from 73 per cent in 1947 to about 46 per cent in 1958.
That is an alarming drop for those who are concerned about America’s reserve airlift potential. The United States generates fully two-thirds of the total traffic on international routes, but its airlines no longer carry two-thirds of that traffic, or anything close to it. A steadily smaller share of the American tourist dollar or air traffic dollar is being spent with U. S.-flag carriers. All too vividly, it recalls the sad history of the American merchant marine during its troubled decades.
After proper account is taken of the great increase in the number of international airlines, the sag in the share of traffic held by the U. S. carriers is still ominous. It forms a pattern which, if continued much farther, will make it impossible to maintain by private enterprise and without large subsidies the kind of emergency airlift capacity we must have.
It is of course impossible to say precisely why the U. S. share of world air traffic has been declining. A substantial part of the decline was in the cards, as European economic recovery proceeded. But the conclusion is inescapable that the very generous concessions made to several foreign airlines in bilateral agreements between 1955 and 1957 are an important factor. Obviously, it is impossible also to lay down a perfectly clear rule as to just what privileges the United States should grant to foreign-flag airlines, in routes and in access to various gateway and interior cities of the United States. What can be said emphatically is that all such bilaterals ought to be made with the clear purpose of dividing the traffic equitably. That is to say, route assignments should be designed to give the U. S.-flag carriers, if possible, the gross international traffic that is proportionate to what the United States generates.
Jets—And a New Problem
During the postwar decade, despite growing competition, rising costs, and some adverse rulings, America’s overseas air carriers managed to put themselves into a strong position. Virtually all of them went off subsidy, became fully self-supporting enterprises. Even with a reduced share of total traffic, they could hope to weather the storm of intensified competition. But now the jet age is upon us. It poses a new and formidable problem.
Douglas, Boeing, and Convair have designed, built and test-flown their entries for the jet transport competition. On a large, transoceanic jet transport aircraft, there is a five to $5½ million price tag. They will be wonderful planes, but costly. The U. S. scheduled airlines (domestic and overseas) have on order, for delivery between late 1958 and 1961, some 474 new aircraft. Of these, 230 will be pure jets, 167 jet props, seventy piston aircraft, and seven helicopters. These new aircraft represent an investment of perhaps $3 billion. That is private American capital, risked in the hope of earning a return. It has to be amortized out of the earnings of our privately-owned airlines.
This is a massive risk the airlines of the United States are taking. The profit margin of domestic airlines has shrunk greatly in the last five years; and the position of the international airlines is even more serious, with the kind of competition they face. Much depends on government policy. The conditions in which our overseas carriers operate, in world competition and to some extent our domestic lines also, hinge on the policies embodied in the bilateral agreements the U. S. government makes—and the route assignments it makes to U. S. and foreign carriers.
In the total logistics picture, airlift is not a large segment. If we have 10,000 tons to deploy 8,000 miles distant, there is a theoretical choice. We can move that tonnage of personnel or cargo by air, using 122 large aircraft, and five tankers to move the fuel needed for overseas turn-around by the airplanes, and do it in 24 days. Or we can move the same tonnage in one large freighter, making one trip, in 21 days.
But there are always spare parts, new fuses, mail, technicians for special, urgent jobs, or critical items forgotten in the loading of ships for an operation many weeks earlier. Here, airlift is decisive. And we need more than the armed forces can keep in readiness, at reasonable cost. That is why our national policy must be designed to protect the health and vigor of our civil air fleet. We have found how to maintain a strong, vigorous, modern merchant marine on the face of the seven seas. We have now to do the same for our merchant marine of the air. And the first step is to insure that our international civil airlines get a fair percentage share of the total traffic into and out of the United States.
A Graduate of the Naval School of Military Government of Columbia University, Mr. Hessler served with the Fast Carrier Task Forces during the operations of 1945. Author of Operation Survival, a study of American military policy, and three times winner of the U. S. Naval Institute Prize Essay contest, he is Foreign Editor of the Cincinnati Enquirer.
★
ACE OF THE BASE
Contributed by Lieutenant (j.g.) Bart W. Fordham, USN
The control tower had been plagued for weeks by an unknown pilot who made poetic and unauthorized radio transmissions to the WAVES on duty in the tower. They were unable to catch the culprit because of the large number of planes operating in the area.
One day, however, his luck ran out. As this wag made one of his typical transmissions, “Flower of the tower, this is Ace of the Base. What’s the weather of the hour?” a very masculine voice replied, “Ace of the Base, this is the tower duty officer. You can come down now. All of the other planes have.”
(The Naval Institute will pay $5.00 for each anecdote accepted for publication in the Proceedings.)
* U. S. merchant marine policy is fully discussed in "The U. S. Merchant Marine and National Defense," by RAdm. Walter C. Ford, Proceedings, Nov. 1957.